On The Roller-Coaster Ride

If you’ve got some of your retirement savings invested in the stock market, as many of us do, the last few days have been unnerving.  The market had an historic run up, and then it went down again.  Yesterday, where the Dow Jones Industrial Average at one point had dropped 1600 points, was an especially wild ride.

704254-001When the market behaves like this, what’s a normal investor, who’s not an insider or a financial kingpin, supposed to do?  You can get dizzy just reading all of the different views of what is “really” going on.  Some people say it’s just a predictable correction after years of historic gains.  Some say the Trump tax cuts have overheated the economy and the market is reacting to that.  Some say we’re long overdue for a bear market.  And some say the Federal Reserve Board hates President Trump and his focus on the stock market as a proxy for his presidency and just wants to bring him down low.

(The last theory, in which the Fed would be intentionally manipulating the market for overt political purposes, is especially troubling — and even in these conspiratorial times, seems pretty unbelievable.  To buy that theory, you’ve got to conclude that the Fed’s dislike for President Trump is so powerful that they are perfectly willing to take actions that torpedo the retirement portfolios of millions of individual investors just to give the President a black eye.  Could bureaucrats really be so disdainful of average Americans?  Call me naive, but I find that incredibly hard to believe.)

So what’s really happening here?  Beats me!  My guess is that the run-up has been so significant that there are lots of people out there who thought it was time to take their profits, and the downward movement caused by those sales then triggered some market-decline benchmarks that automatically produced further sales and caused the sharp fall — but that’s just a guess.  Maybe somewhere on Wall Street somebody knows the real answer for sure, but I doubt it.  The stock market is so complex, so huge, and so prone to human reaction that it’s difficult to explain these downward spikes.

So, to put the question again, what’s a little-guy investor to do?  If you think saving money for retirement is prudent — if you don’t, you probably wouldn’t read this post in the first place — and you need to find a place to put your money until the retirement day comes, there really aren’t many alternatives to the stock market that can produce a meaningful return.  Most of us aren’t offered opportunities to invest in real estate deals or development projects, and we probably wouldn’t be comfortable having a big chunk of our money invested in such illiquid things, anyway.  Bond yields are low, and banks pay next to nothing on CDs.  So where else are you going to put your money?  This reality suggests that basic, brute economic forces are going to continue to make the stock market a preferred investment option for people and businesses, not just in the U.S. but also abroad.

But you’ve got to recognize that the stock market is a long-term investment, and it’s going to be a roller coaster ride.  When you’re on the coaster, it’s pretty hard to get off on the highest hill, and you don’t want to exit the car and move onto the tracks at the bottom, either.  You just hold on, scream when the cars start that big downward move, and feel your pulse racing until the end.  Or, you can simply close your eyes, recognize you’re on the ride and there’s not much you can do about it, and focus on other things until your circumstances make you a short-term investor and there are true decisions to be made.

Who knows what this current jittery period will bring?  It’s time to hang on tight.

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Whither The Wall

President Trump’s promised wall along the border between the United States and Mexico was part of the wrangling between Republicans and Democrats that led to a brief government shutdown over the weekend.

onrfrqd6mxsghuj5Surprisingly, some Democrats who had long opposed the wall signaled that they were willing to drop their opposition if Republicans would make concessions to give “Dreamers” — immigrants who were brought illegally to the United States when they were children — additional legal protections.  And, in negotiations with the President to try to avoid the shutdown, Senate Democratic Leader Charles Schumer evidently offered to agree to more than the $1.6 billion in funding for the wall that Trump has requested.  More recently, Democratic Senators are saying that Schumer has withdrawn that offer and it is “off the table” because it was intended solely as a last-ditch effort to avoid the shutdown.

And, as the politicians wrangle, prototypes of different models of the wall apparently are being tested to determine whether they really would deter illegal border crossings.  According to a report by the Associated Press, eight models of the wall have been constructed in San Diego, and U.S. military special forces and U.S. Customs and Border units spent weeks trying to breach and scale the models.  The models are made of different materials, including steel and concrete composites, and are as much as 30 feet in height.  According to the reports, the designs did have some success in repelling the military forces, which include members trained in trying to climb high walls.

Political positions are fluid, but it would seem to be difficult to take the position that a wall is wrong on principle after you’ve agreed to support it, and even throw more than a billion dollars at its construction, in exchange for other concessions.  And if the reports on the testing are accurate, that would remove one argument that often is made against Trump’s wall proposal — namely, that a wall would be ineffective because illegal immigrants would be able to climb or otherwise breach it.  Of course, even if the ethical and functional objections to the wall are set aside, there would remain other grounds for opposition, including enormous cost, the impracticality of a wall in rugged mountainous regions, and the aesthetics of a wall in certain scenic areas — but the signs indicate that Donald Trump’s wall may be moving closer to reality.

Why A “Windfall”?

If you’ve been following the aftermath of the tax reduction legislation passed by Congress and signed into law by President Trump, you’ve seen stories about how some corporations have reacted to the new law by giving their employees bonuses or cutting their charges to consumers, and other, more critical stories noting that many of the companies are giving their employees one-off bonuses, rather than more permanent raises.

windfall-money-manBut while different articles about the tax cut legislation may make different points about how the tax cut legislation is affecting companies, workers, and the country at large, the coverage does seem to have one curious common theme and descriptive element:  the tax relief provided by the new law is typically said to have produced a “windfall” for companies and individuals alike.

It’s a very interesting choice of words — and one that conveys a deeper message, too.  The Merriam-Webster Dictionary defines “windfall” as “something (such as a tree or fruit) blown down by the wind” or as “an unexpected, unearned, or sudden gain or advantage.” The key underlying concept is that the “windfall” is a lucky gift and an unearned surprise — like an inheritance from your mother’s rich second cousin whom you’d never met.

“Windfall” is a telltale choice of words in this context because tax payments necessarily have been earned by whoever is making them; companies and individuals wouldn’t be paying taxes if they hadn’t sold the products or done the work or made the investments that generated the revenue in the first place.  By calling the proceeds of a tax cut in which individuals and companies pay less a “windfall” for them, you’re really suggesting that the taxpayers aren’t entitled to their own money, the government is — and taxpayers should consider themselves lucky that, for a time at least, they get to keep more of it.

Income earned as the fruit of labor or investment isn’t like fruit blown down from a stranger’s apple tree.  You can argue about whether the tax cut was good economic or social policy, but when taxpayers get to hold on to more of the money they’ve already earned it can’t reasonably be characterized a “windfall” for them.  The fact that so many news articles nevertheless present the issue in that way says a lot about how the news media, at least, views the respective entitlements of taxpayers, and government, to the money taxpayers earn.

Shutdown Fatigue

The federal government shut down at midnight, when Congress proved to be unable to agree on a another stopgap spending bill.  As is usually the case, the Democrats and the Republicans used the looming shutdown to try to increase their leverage to obtain their political goals — whether those goals are immigration reform, or health care funding, or something else — and when neither side blinked, the shutdown occurred.  Of course, each side then blamed the other.

maxresdefaultWe’ve been through this scenario multiple times before, most recently in 2013.  We somehow made it through each of those prior cataclysms, and I’m pretty sure that the sun will come up today as well.

I may be wrong about this, but out here in the heartland I’m sensing a lot less angst, generally, about this shutdown than seemed to be the case with prior shutdowns.  Maybe it’s because we’ve been through this same, pointless charade multiple times before, and the country just has a lingering case of shutdown fatigue.  Maybe it’s because, with the flood of scandals and tweetstorms and investigations and unseemly behavior that has been washing over the nation in recent months, we’ve already used up our storehouses of outrage and have just been psychologically bludgeoned until we’re functionally insensate.  Or maybe, just maybe, we’ve come to recognize that all of this shutdown stuff is just more callous political maneuvering by both parties, and we’re heartily sick and tired of being viewed as mere pawns to be manipulated in the stupid power games that are always being played in Washington, D.C.

Whatever the cause, we’ll just go on living our lives, without paying too much attention to the yammering politicos and their efforts to pin all of the blame for this unnecessary disruption and unending dysfunctionality and irresponsibility somewhere else.  Who knows?  Maybe if we just ignore this latest shutdown, the politicians might realize that their shutdown gambit isn’t working anymore and actually go back to doing their jobs.

Where Are All Of The Great New Political Protest Songs?

Lately I’ve been listening to my iPod playlist of protest songs.  It features a lot of music from Bob Dylan and Rage Against The Machine, of course, as well as some great songs like CSNY’s Ohio, Stevie Wonder’s Living For The City, Buffalo Springfield’s For What It’s Worth, Mercy, Mercy Me from Marvin Gaye, Bruce Springsteen’s Born In The U.S.A., Zombie from The Cranberries, Get Up, Stand Up from Bob Marley and the Wailers, John Lennon’s Working Class Hero, Neil Young’s Rockin’ In The Free WorldMy City Was Gone by The Pretenders, Capital G by Nine Inch Nails, The Temptations’ Masterpiece, and a whole lot more.  

rs-4997-rectangleIn all, there are more than 230 classic songs on the playlist, spanning multiple decades, all featuring great music and lyrics that pack a punch and convey a clear, pointed political message.  There are songs about important social and political topics of the day, like racism, the Vietnam War, oppression, the right to protest, poverty, ecology and the environment, urban renewal, the indoctrination of youth, and the mallification of America.  And listening to the songs got me to wondering:  where are the new, great political protest songs about our current era?

I guess just about everybody will agree on one thing about President Donald Trump:  a lot of people hate his guts and despise his policies.  He’s depicted as a racist, as a Nazi, as an imbecile, as a warmonger, as an oppressor, and as just about any other bad thing you can imagine.  It seems like President Trump offers very fertile territory for some great modern protest songs.  And don’t tell me that more time needs to pass — CSNY’s Ohio, about the National Guard’s shooting of students at Kent State University, was written, recorded, and released to the public in about two weeks, and the immediacy of the anguish about the unwarranted killings, which comes through in the song with raw, crackling power, is what makes it one of the greatest protest songs ever recorded.

So, are there any great new political protest songs about President Trump and his Twitter comments and his policies, and if not, why not?  Are they all rap or hip-hop songs, and just not reaching the ears of 60-year-olds?

“Shithole” Manners

I really would rather not write all the time about President Trump and his latest escapades.  I honestly would rather write about just about anything else.  But sometimes, President Trump is alleged to have said something that simply can’t be ignored.

donald-trump-gty-jt-180107_16x9_992So it is with the allegation that, during a meeting with congressional leaders about American immigration policy issues, Trump referred to Haiti and some countries in Africa as “shitholes” and said American policy should try to restrict immigration from those places.  Trump later issued tweets that seem to deny the use of that vulgar term, as well as disputing the notion that his remarks were racially motivated, although he admitted to using “tough” language during the meeting.  On the other hand, Illinois Senator Dick Durbin, who attended the meeting, confirms the report that Trump used the word “shithole” to describe the countries.

Could it really be that the President of the United States used the term “shithole” to describe another sovereign nation, however strife-torn or impoverished or economically or socially challenged it might be?  Could it really be that the President of the United States, who as the head of the executive branch of the government is the titular head of the American diplomatic corps, used such crass, inflammatory, undiplomatic language in an official meeting?  Could it really be that the President of the United States is so profoundly ill-mannered and graceless and brutal?  Could it really be that the President of the United States wouldn’t recognize that people would interpret such remarks as racially motivated and that world leaders would react with shock and horror to such statements?  It’s mind-boggling . . . but in the era of the Trump presidency the mind-boggling has become commonplace.

But let’s give our elected President the benefit of the doubt and accept his denial that he used that coarse term, and assume that Senator Durbin and any other sources for the news reports simply misheard whatever “tough language” the President actually used.  What’s equally bad, from my perspective, is that some Trump supporters have actually tried to defend the early reports of Trump’s alleged “shithole” remarks by arguing that the term accurately describes the countries.  Such arguments, which speak so dismissively and callously about countries where human beings live, and work, and struggle, solely in order to advance a political point, show an appalling lack of basic human kindness and decency and simple good manners.  Calling someone else’s country a “shithole” is almost sadistic in its cruelty.

It’s another deeply troubling sign of just how low and horrible our political discourse and culture have become.  Where is our humanity, and basic decency?

A Blunt Instrument

As of January 1, 2018, Seattle has placed a tax — it’s officially called a “sweetened beverage recovery fee” — on sugary sodas and “sports drinks” like Gatorade.  Costco, the big box membership club retailer, has responded by placing signs showing consumers the specific impact of the tax on the Costco price for the product — and it’s a whopper.

video__sugar_tax_sticker_shock_0_10405324_ver1-0_640_360The Costco signs show that the Seattle tax adds $10.34 to a Gatorade 35-bottle variety pack — the kind you might buy if you were responsible for buying refreshments for your kid’s sports team to consume after a practice.  The price of the product was $15.99, but with the new tax the price is now $26.33.  The tax added $7.56 to a 36-can case of Dr. Pepper, bringing the price from $9.99 to $17.55.  Costco also helpfully added signage to explain the tax-related increase to its customers and remind them that they can avoid paying the additional cost simply by going to a nearby Costco located out of the city limits.  Some customers have told local TV stations they plan on doing just that.  There’s also been lots of social media chatter about the Costco signs and the impact of the tax on prices.

What’s the point of the tax?  Seattle evidently is concerned about obesity, which some studies have linked, at least in part, to the consumption of sugary soft drinks.  Seattle hopes that by imposing a substantial tax on soft drinks and “sports drinks,” it will incentivize people to make healthier choices.  But get this:  the tax exempts sweetened products from certified manufacturers with annual worldwide gross revenue of $2 million or less, and products from certified manufacturers with gross revenue of more than $2 million but less than $5 million pay a much smaller tax.  That exemption is a purely political decision that doesn’t make sense as a public health issue, because the size of the producer obviously doesn’t change whatever the impact of the product might be.  Seattle’s approach also focuses only on sweetened drinks, and doesn’t address products like ice cream, candy bars, “snack foods,” or frozen pizza that might also be said to contribute to “unhealthy lifestyles.”  And, of course, it doesn’t begin to address other issues that contribute directly to obesity, such as lack of exercise.

Other cities, like Chicago, have tried soft drink taxes and dumped them in the face of business opposition.  Costco is providing a salutary service by alerting its customers to the specific cost impact of the tax so they can factor it into their decision-making.  The Seattle experiment, as illuminated by the Costco signs, reminds us, yet again, that taxes are a pretty blunt instrument when it comes to trying to change behavior and achieve broader policies — and that taxes are always going to be affected by political considerations, too.